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Where Taxpayers and Advisers Meet

CGT Apportionment on Second Property Sale

Giannini460
Posts:2
Joined:Thu Aug 05, 2021 4:43 pm
CGT Apportionment on Second Property Sale

Postby Giannini460 » Thu Aug 05, 2021 5:11 pm

My partner and I are unmarried and not in a civil partnership. We bought a flat in 2010 for £101K which we rented out until December 2020 (i.e. it's a second property , we have never ourselves lived in it). We are shortly to complete on its sale for £125K. My partner contributed £21K to the purchase and I contributed £80K, We have always considered it to be equally jointly owned (always having split rental income equally and declared it that way on yearly tax returns). What is the situation regarding CGT, i.e. can we declare equal gains of £12K or do we have to split the gains in accord with our original contributions to the purchase?

someone
Posts:692
Joined:Mon Feb 13, 2017 10:09 am

Re: CGT Apportionment on Second Property Sale

Postby someone » Fri Aug 06, 2021 6:51 am

Unless there is an explicit trust in place (or the percentages of ownership are specified at land registry) and the property is registered at land registry jointly the presumption would be that you own the property beneficially 50:50. Your actions by declaring the income 50:50 would tend to confirm that. Technically there would have been a gift of around 30K from you to your partner that will have fallen out of your estate for IHT purposes after seven years.

If the property is only in one name and there is no explicit trust in place then it might we worth talking to your solicitor as to whether it's worth creating a trust now that documents the historical ownership (you cannot, and must not backdate a trust deed but one can be created today that documents a historical event.) But even without such a deed the beneficial ownership can still be 50:50 - the only reason for creating a trust deed now would be to cover yourself if in 15 years time HMRC decided that you had deliberately evaded CGT.

If the percentages of ownership are specified somewhere and are not 50:50 then it's possible that events have created an implicit transfer - however most transfers of land and property must be in writing. Because you are not married, it's possible that the beneficial interest to the income does not match the beneficial interest in the capital.

Finally, if the property is jointly owned as joint tenants (rather than tenants in common) then the ownership is definitely 50:50 for CGT purposes. As you are unmarried, and especially if you do not have wills (which I would STRONGLY recommend you get ASAP), then your original conveyancing solicitor might have recommended ownership as JT.

Giannini460
Posts:2
Joined:Thu Aug 05, 2021 4:43 pm

Re: CGT Apportionment on Second Property Sale

Postby Giannini460 » Fri Aug 06, 2021 4:42 pm

Thank you very much for your very helpful reply to my query


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